Correlation Between Ocado Group and Woolworths Group
Can any of the company-specific risk be diversified away by investing in both Ocado Group and Woolworths Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ocado Group and Woolworths Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ocado Group plc and Woolworths Group Limited, you can compare the effects of market volatilities on Ocado Group and Woolworths Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ocado Group with a short position of Woolworths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ocado Group and Woolworths Group.
Diversification Opportunities for Ocado Group and Woolworths Group
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ocado and Woolworths is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ocado Group plc and Woolworths Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths Group and Ocado Group is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ocado Group plc are associated (or correlated) with Woolworths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths Group has no effect on the direction of Ocado Group i.e., Ocado Group and Woolworths Group go up and down completely randomly.
Pair Corralation between Ocado Group and Woolworths Group
Assuming the 90 days horizon Ocado Group plc is expected to under-perform the Woolworths Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ocado Group plc is 1.03 times less risky than Woolworths Group. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Woolworths Group Limited is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,679 in Woolworths Group Limited on August 28, 2024 and sell it today you would lose (845.00) from holding Woolworths Group Limited or give up 31.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 69.69% |
| Values | Daily Returns |
Ocado Group plc vs. Woolworths Group Limited
Performance |
| Timeline |
| Ocado Group plc |
| Woolworths Group |
Ocado Group and Woolworths Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ocado Group and Woolworths Group
The main advantage of trading using opposite Ocado Group and Woolworths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ocado Group position performs unexpectedly, Woolworths Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Woolworths Group will offset losses from the drop in Woolworths Group's long position.| Ocado Group vs. Natural Grocers by | Ocado Group vs. Grocery Outlet Holding | Ocado Group vs. Village Super Market | Ocado Group vs. Ingles Markets Incorporated |
| Woolworths Group vs. Natural Grocers by | Woolworths Group vs. Grocery Outlet Holding | Woolworths Group vs. Village Super Market | Woolworths Group vs. Ingles Markets Incorporated |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.
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